john kelly will take questions on capitol hill about border security. the executive order on immigrants and refugees. and construction of a wall on the u.s.-mexico border. he will testify before the full house homeland security committee and the border security subcommittee. our live coverage begins at 10:00 a.m. eastern on c-span 3 and streamed live on c-span.org or listen live on the free c-span radio app. means tax ways and policy subcommittee chair and presented a peter roskam talks about overhauling the tax code. his speech from the heritage foundation in washington is about 40 minutes. speaks to the ways and means subcommittee on tax policy. he is at the heritage foundation. >> good afternoon. welcome to the heritage

foundation. it is my pleasure to introduce peterest, congressman roskam. term.serving in his sixth he is a graduate of the university of illinois and he earned a law degree from the chicago institute of technology. he is a member of the house ways and means committee where he served as chairman of the panel tax committee. we are fortunate to have the congressman with us today because in this role he will no doubt be playing an important developthe effort to debate and pass fundamental tax reform. in his remarks today he will discuss three things that animates his work in the 105th congress. job opportunities for all americans. less code that is fair and burdensome. the internal revenue reform.

hope that we will follow his lead to develop fundamental tax reform consistent with these goals. ourse join me in welcoming guests at the lectern, congressman peter roskam. [applause] thank you.: my wife elizabeth, she was telling the story that as we walked up the are, 30 years ago they were serving cores beer. i do not know if that changes but it is not necessarily in the middle of the day. we will look at that later. in 2015, i went to china. if you are an american china,aker and you go to you get a bunch of briefings before aegon people tell you how great china is. they tell you about the

infrastructure, they tell you about the and to price, they tell you all these different things. i went to china and came back in i came to a different conclusion. the conclusion i came to was that we have got challenges and they have got troubles. so, what are china's troubles, quickly. number one, they have a demographic problem. they have too many boys that two parents,sed by for grandparents, and those of you are fathers of sons, you know it does not end well particularly when you have a whole culture like that. they have a military that it get one0,000 dollars to star in the chinese army. they have been off more than they can chew in the south china sea. the only thing worse than a unified peninsula from a chinese born of you is the process of a nuclear peninsula with kim jong-un being so oppressive and

impunity.h they are on the verge of a personality cult with president xi. tookhe pollution literally my breath away, could not even believe how incredible it was. so i flew back and i landed in chicagoland and i am at o'hare airport and i am having one of those kiss the tarmac kinds of moments. i thought, this place is great. i love this country and we have so much opportunity here it is simply amazing. ok, so what is the nature of what we have going on. what are the challenges? use the nature part of what we have going on. we have an economic mailer that dynamic ande and restless and aggressive. we have been economic culture in this country that is completely unique.

if somebody tries something and fails, we do not characterize them as losers. we say, how charming. how nice are you. you are in the first paragraph of your feature story. we love the idea that somebody goes out and try something, feels, try something, fails, try something, feels, and ultimately succeeds. all of these things can work to our benefit. have a, i said we challenge. what are our challenges? we are here today to talk about one of them. our tax code. our tax code is not working anymore. was created in 1986, as we all know and we have an opportunity now to reflect that on that. let me just sort of do a freeze-frame discussion. the election in november nationally, the monday after the election in november we came out

from the house of representatives, obviously. i interacted with a number of democratic colleagues. they were thunderstruck. thunderstruck. they could not believe that they had lost the election to donald trump. they were thunderstruck. list of the point of disorientation. when something like that happens to you, what is the smart thing to do? movect, contemplate, and forward. in my opinion, nationally democrats are not reflecting. reacting. tumbling down. that is their problem not our problem right now but it is what to avoid for us. facted to reflect on the that our tax code is not working for us anymore. my home state of illinois is an example of avoidance behavior that gets completely out of control. by avoiding one problem after another problem after another

problem, over time illinois has only into this economic crisis that everybody here is the money with. let us not do that. let us recognize the nature of the debate right now. let us reflect on it and look at it as an opportunity. quebec to 1986. to put into context how long of 1986 was. the chicago bears one b football -- the chicago bears won the super bowl. that was the year of the chernobyl incident. that was the year of the challenger disaster. and about that. it has been an incredibly long time and yet that is the duration of our current tax code. what has happened in the past 30 years from economic point of view? the entire digital economy. none of which existed as and shall back in 1980 six. what else? the global nature of

the economy has fundamentally shifted all the way around. and awas obviously trade global economy before but there has been a fundamental shift in terms of integration all across the spectrum so now we have to reflect back and say, this is our time. i am absolutely convinced that we are at a national inflection point as it relates to tax reform. inflection national point. what do i mean by that? i think there are three key things. nobody that is defending the status quo. nobody! there is no voice, no person, no entity up there today sank him you know what? the u.s. tax code is great. leave it alone. nobody. there are people who like some element of the text code, clearly, but nobody in its entirety is communicating that they like it the way it is.

what are some of things they don't like? think about this. i have an expectation and a thate for simplicity rivals all of your desires for simplicity. you can act like you are like me but you're not. we're in this together. easy,e simple, quick, fast things. and about this. expectation, not a hope, and expectation that i can go on my iphone, click on my airlines app using two thumbs, by the way, i can click on a flight and get a boarding pass sent to me on this device within the weakling of an eye. i expect that. i desire that level of simplicity. i do not want to be on the phone with a travel agent. an 800t want to wait on number. you get my point. we have a real interest in simplicity.

so that nobody is defending the status quo is part of that. the other thing, the second reason i think we are at a national inflection point is the the shine is completely off the penny of the internal revenue service. i mean, completely off the penny. not just competitive see but malevolence and targeting. single asset forfeitures and particular. let me take you to a story about the less congress because it is poignant and it drives the debate about the enforcement of the agency. there was a couple, dairy farmers from maryland. they got into the farmers market business, which is a cash business. they started making deposits of cash and they were told by their hey, you know it is a big hassle when you come in here with cash because when you do we have to make a report to the federal government. just coming up

with $10,000 at a time -- coming up with less than $10,000 at a time. mr. mrs. ours, the nicest couple ever, said sure. upon reflection, that is a bad idea because that is a felony. that is structuring. they were structuring their deposits so as to avoid reporting requirements. to collapse the story down in the interest of time, the irs got wind of this and essentially shutdown theat -- operation. they did a civil asset couldture in which they not figure out what was going on. they go to the bank, the bank says, you cannot do anything. or deposits are being seized by the internal revenue service and you can imagine how this goes. they were flummoxed. over time, on a bipartisan basis we were able to get the omission

or of the internal revenue service to issue a public apology, which was like birthing a calf, by the way, terms of getting that done and we have been able to change some of the statutes and some of the roles and we have been able to return some of this money to similarly situated people but you take my point. you have got the enforcement agency of the tax code, who 20 years ago, a quarter-century time of have enjoyed a late is fair. don't mess around -- of as a result, i think that is driving part of flexion point. the third reason i think we are at a national inflection point is these and versions. base erosion of the u.s. economy is really, really significant and for us to sit back in basically wring our hands and get anxious about it

and not come up with an action plan is really foolish in my view. it is not as if they're of not been attempts on both side of the aisle to get this done. as house republicans, we worked in the last congress with coming up with rules. patent boxes, earnings stripping's, this, that, the other thing. none of this we can really turn themrank on to keep satisfied. the obama administration came up with their approach which was really, really concerning. the regulations recharacterize the debt, equity, upsetting 40 years of treasury doctrine so treasury and -- doctrine so to speak. the analogy i came up with this simple. look, we are trying to fix this leaky basement and we are patching here and patching their and patching their and finally dawns upon you, we have got to

fill the whole thing in. change the dynamic and tightly. move away from this model entirely. i think this is where we are. some of these and versions, johnson controls live in wisconsin and going to ireland. leaving georgia, going to the u.k. burger king going from florida to canada. horizon pharma going to ireland. rayon leaving illinois for the u.k. interestingly, and many of these cases, these are companies that are going where? they are not necessarily going to a tax haven. these are companies going to close, close allies and friends in our commercial architecture, so to speak. what we've got to do is say, how is it that we make this a more .ttractive jurisdiction i had the chance a couple years -- stick with me,

this is like a seinfeld episode. it will come together. i met with this man on a trip to jerusalem. jewish refusethe refuseniks i met with. i asked him if a story was true i heard. i heard that when he was a refus gulag, ands in the he heard ronald reagan speech where he calls out the administration. it had a profound affect on him bothverybody in the gulag, his nose and guards alike. why? because the notion that the american president was calling something what it was was

basically for them foreshadowing of the beginning of the end. when there is clarity about what was being discussed, it had a profound impact. he can from that story and said interestingly, congressman these story is even better than that. i had a visit with president reagan in the oval office and he end he told president reagan at that time, reagan called in his staff because he wanted the staff to d president reagan at that time hear this. the staffers had probably told him, don't put in the knee speech it is too controversial. ] aughter roskam: we have a tax code that doesn't work. we have an inversion problem that is going to continue and will exacerbate itself notwithstanding all of these attempts to try to mitigate

against it. so now, here we come and we have got eight blueprint. i would argue that we have essentially a collapsing window of opportunity right now to get this done and you have got a speaker of the house and paul ryan who is going to create as much legislative space as possible. probablyactually rather be chairman of the ways and means committee to be honest. will create end, he as much space and opportunity as is entirely possible. tax reform, however, is not for the faint of heart so when i first got on the committee i called james baker. i am a james baker fan. talking about tax reform, i am going to call the one person who was in the middle of it all. james baker. he was very generous with his time and very insightful and had stories and anecdotes and

perspectives but at the end of the phone call, he said something that i have not forgotten. he said, peter remember. ronald reagan's number one domestic priority in his second term. he used everything he had as ronald reagan. he used every tool he had at the white house. he used every tool at the treasury department. we had bipartisan, bicameral, powerful advocates and sponsors on capitol hill and it collapsed three times and almost did not happen. !ot a run, see you so when i say this is not for the faint of heart, this is not for the faint of heart. this discussion is going to continue. we will hear stories about, this person since this today, that person says that today, but the name of the game in terms of framing this up is to recognize that the status quo is simply unsustainable.

so, you are familiar with the blueprint. you are familiar with this document. and it isoposal essentially an invitational across the country for people to engage. one of the things we learn from the passage of the affordable care act is how not to do this. if people feel jammed, if they feel like nobody is listening, if they do not have an opportunity to get their word in, express themselves, then the process will actually seize up on itself.e in similarly, you can talk yourself to death. contemplate yourself to death. you can also create an environment where decisions are not made. pacereally pleased at the with which chairman brady has been moving things. the blueprint was articulated in july. a great deal of momentum was in november,ting obviously with the election.

and moving forward, it has been the focal point of conversation not just at our retreat but obviously with the trump administration and particularly at large.ublic suburban chicago, there are any third of first, second, generation companies that are manufacturinger s companies. one of the things i have heard time and time and time again m is the difficulty they have from an international point of view and that is where the blueprint is trying to speak directly to that. we've all stipulated we want to enhance the manufacturing base in this country. we have all recognize we want this to be revenue neutral. over the past six years, we have publicly debated and litigated and persuaded the country that death was a serious issue. $20 trillion of debt is a

serious issue. we come at this and a fresh way from shutting us from scoring that defies logic but instead, let's look at this on a dynamic basis to get sure to get a real-world evaluation. it is our burden to make sure it is say the real world evaluation and not just exceed best. pixie dust.ust tax code.a simplified the more people explore things, look a different alternatives, chew on different choices, i they will come down and say the elements and the architecture and the structure of the blueprint is the best way to go. so, the back story quickly on border adjustability is something that we really need to focus in on.

as we all know, largely every other economy in the world has adjusted their borders. it came to my attention a couple when border that adjustability was first allowed on the global trading scene as it relates to that in particular, it was minimum. but what happened? over time, it it has grown. the adjustment then, which is a disadvantage to us, has grown as well. so we know the united states is significancetry of it has a double tax, essentially. on the one hand, we tax the cost of a manufactured good in the united states, it is cooked into the income tax and then it is into axed as it goes foreign jurisdiction and by contrast, the foreign jurisdiction has a their tax removed and it is not taxed when it comes in here.

so these things are all, when you are the biggest, strongest economy in the world, you can -- you cant of pain and are a lot of pains and missteps. we have been able to muscle through them before but i am telling you, those days are gone. what we need to do is heed these signals. these companies that are leaving are not leaving based on a natural disaster. not like a hurricane, a flood, a catastrophe that cannot be mitigated. have beenrules that created and if they are rules that are been created, they are rules that can be re-created. oneme just close my making point. that is this. there is a disposition and i think, and attitude that we need to embody. church fathers of the

fourth century i think was saint ambrose. in the context of his faith he has attributed this theme, we don't impose on the world, we propose a more equitable way. we do not impose, we propose a more excellent way. i think the blueprint is a proposal. the blueprint is a concept that says, let's recognize the status quo is not working. let's recognize we need to move quickly but we do not want to trip all over ourselves but by the same token, we need to make some decisions. i am very upbeat about this. i think that there is a real, real opportunity for us to move forward on this and i think one year from now we will be celebrating this tax reform act and most importantly, we will be celebrating the type of growth americans are really, really hungry for. thank you very much and i would be happy to answer it in

questions that make me look good. [applause] >> those two and three and --rth generation companies will the repeal be in effect? rep. roskam: one of the tenants is the repeal of the death tax. >> you mentioned in the beginning of your speech, structure. are you telling us that congress those are two separate issues.

they are two separate issues. i agree with you. there is legislation that we moved through the house, got through the senate that would deal with the structuring issue as relates to the internal revenue code that will not be part of tax reform. i will be advocating for that and i will be reintroducing that. as you point out, these are two separate things. the reason i bring it to everyone's attention is the nature of the application of that statute was too aggressive. i told the irs officials when we were having a hearing on this and in subsequent private conversations. i said, you are like inspector jevert in "les mis." what are you doing? we want john valjean.

valjean. do you know what i'm saying? yes. >> [indiscernible] working for manufacturing company who is based in the united states. what do you think about the other factions in the city that arelooking at this and concerned about, well, we overly rely on import? how is that going to be resolved? rep. roskam: i was in a discussion with the ceo of one of the companies concerned about this, and he laid out a number of his concerns. and i said nobody wants those terrible things to happen. so, let's move forward on this basis. first of all, we think that the currencies are going to adjust, and you are familiar with that. .t's interesting

some of the original opponent said currencies are never going to adjust. now they have shifted, some of those folks and they are worried about the timing of currency adjustment. so, let us work with you on transition rules. i turned the conversation back on the executive and said how is it now that we have a tax code that puts you in a situation where so many of your suppliers are overseas? let's fix that. help us in terms of transition. help us in terms of understanding the nature of the contracts that you have and work with the committee to give us the type of input so that you have stronger, more robust, and more dynamic supply lines. he did not walk away and say, oh, peter, great, i'm all for you, that in terms of our disposition and our attitude, we want to be having significant input from retailers in

particular, from those, others who have expressed concerns, because i am of the view that the more open we are to mitigate their situations and them understandng -- i that a ceo needs to be thinking -- a public ceo needs to be thinking in terms of 13 weeks. so, every 13 weeks, he has to be answering to wall street, he has to be answering the boards, he has to be answering to outside groups and shareholder price. we think we can help with that. but that said, you want your policy makers to be thinking beyond 13 weeks. you want your policymakers to understand generational opportunities. i think that's the obligation we have. we think we can mitigate to we think we can help. to beu actually want us thinking much further out than one quarter at a time. yes, sir. >> [indiscernible]

i think a lot of the uncertainty , the nerves, wherever you follow this issue comes from the uncertainty of the timeframe. you just said a year from now we will all be celebrating the great success of tax reform and the speaker has said he wants to get this done by august. [indiscernible] when will ways and means be marking this up and when does the house hope to pass it and send it to the other branches of government? giveroskam: ok, i will not you a straight answer on any of that, but let me. can leave. think about this. eave.t me duck and w think about this. let me give you an idea of the avenue and flow of the timing. you get a blueprint that gets published in the summertime, and got a lot of attention since the election. what chairman brady has been doing is gathering members together to say, all right, we

really need to be thinking through the retirement piece of this. we need to be thinking through the education piece of this. we need to be thinking through pastor's. we need to be thinking through all of these sub screen issues. i will tell you, i have been very encouraged by the caliber of that discussion. i been in the number of these discussions. our members are well informed and have opinions. they are willing to share those opinions. it's a matter of trying to win of these things down. then some of these things will .e drafted by staff we will get the feedback and the and we will say, oh, we did not know that was the implication of that. chairman brady is doing an y great job tried to get everyone involved in this. yes, ma'am.

>> thank you for taking my question. so, going to health care a little bit in terms of tax reform, big health care taxes looking -- being looked at, having the exclusion on employer-sponsored insurance. what is your overall plan or vision for fixing the leaky basement, if you will? rep. roskam: all of these things, they interact and are not mutually exclusive. if you go that route, you got a series of choices. if you don't go that route, then you begin to say, well, how is it that you have a restraining influence on the cost of health insurance in particular? so, the health insurance debate is happening at the same time, it is contemporaneous with the tax reform debate. they interact and they touch at some points and they separated others, but those are the types of things that you don't want to necessarily do in a vacuum, and you want to make sure you have a wayr understanding of the

around, and particularly, what are the other cost pressures on employee or. yes, sir. >> going to try to keep this as short as possible, but one of the pillars of progrowth tax reform -- [indiscernible] so they can do their tax the same rate for simplicity in general? rep. roskam: here is what we propose. the nature of your question, you are sensitive to this. there has been a lot of discussion the past few years about, hey, do corporate tax or form and come back and deal with individuals and the pastor is later. that's completely unsatisfying for a lot of obvious reasons. we propose to say, look, -corp. rate the c

down to train percent and at the same time, move the business rate of the pastor is down to 25%. you would move those down the same proportion, so it's not as if there is a disadvantage there. we have to think through, and this is the job of the committee, what is the safe harbor for the past through on what is and isn't income? as you can imagine, there will be a lot of pressure to move it over into the 25% rate as opposed to be 33% rate. we don't want to leave that decision in the hands of the irs criticized five minutes ago. at the same time, we need to clear a clear rule, definition, and so forth. and that's just good hard work of us trying to put that together and then with that proposal open that up for

discussion. we are still very much in the mode of trying to come up with those definitions that we can propose and get feedback on. all right. ok, yes sir. >> [indiscernible] a way to drive revenue? i'm just wondering if that is part of your plan? [laughter] no, 0, 0am: possibility in my view. here's the interesting thing. dave camp did a good job of driving the discussion on tax reform, and we learned a lot of draft.from the camp it was a very arduous exercise, but there were two self-imposed campations that bound the draft discussion. revenue you know,

neutrality based on a static basis. we did all of these things, all of these proposed changes and discussion points, and then there was the distributional neutrality and those two things, what you found that the -- found at the end, it created something, and people went, hmm, where's the oomph? where's the growth percent? you just couldn't get there. we built on that knowledge, which is why we made the decision to move toward dynamic scoring to say, ok, let's look at this in a real-life context. at let's make sure it makes sense. let's make sure it is robust. for the bank tax discussion was essentially driving this towards revenue. an there was not necessarily interesting going that route.

yes. >> [indiscernible] tot you think wto will do adjust? rep. roskam: look, here is the way i think it gets framed up. -- there is aot three-part test. wto has a three-part test essentially. one is, is it a financial contribution to a business? no, it's not. second is is it a national preference question mark know it's not. third is, is it an export subsidy? well, if taking the vat office not in a four subsidy, how is taking my tax off in a four subsidy? i understand that these he for me to say at a podium and it's a difficult -- is a different thing to be discussed at the wto. but we are moving toward the

consumption tax. we are mirroring essentially what the rest of the world is doing, and we are essentially saying we are asserting a right to be treated in the same fashion as the rest of the world is. and we think that we have that right and we think when it all comes down to it, we will be exonerated on that. so. listen, i want to thank the heritage foundation very much just for the opportunity to be here. i look forward to our paths crossing. let me tell you one other quick story in closing. i had an old sunday school went to lunch with. this was about 15 years ago. he was a really wealthy guy. very, very successful guy. during the course of the lunch, i asked him a question. to be, what's it like that rich question mark i said i'm willing to run. but what's it like to be that rich? don't you feel like everybody who is approaching you is hustling you and all the sort of

thing? doesn't it just feel bad question mark and he said something to me that day that was formative for me. formative. it shaped me. and this is what he said. he said, peter, i choose not to be cynical. , guard your heart against cynicism. if they are manipulating me, that's their problem. that's not my problem. he said, nothing good comes from a cynical heart. i know i am in this zip code, which is the heart of cynicism. and yet, there is a bow and see uoyancy i think. i would encourage you to look at this inflection point and think about what the possibilities are and i think there's a real brightness. thank you to the heritage foundation for this fine forum this afternoon. thank you. [applause]

[captions copyright national cable satellite corp. 2017] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] >> british prime theresa may gives an update to parliament about exit and her recent meeting with european leaders in malta. on this morning's "washington journal," we discussed republican attempts to repeal the fordo care act. the at 7:00 a.m. eastern -- affordable care act. live at 7:00 a.m. eastern. sunday night on "q&a" -- >> i have never seen a case -- the snowden case --were so uncritically journalists have accepted information from a single source whose and moscow,

under control of the russian government. >> the book "how america lost its secrets." >> he did enormous damage. his supporters say he did enormous good. and maybe he did some good, because he started a national conversation and he opened up a subject of interest. trump is certainly right is this man has not faced justice, and he deserves to face justice, whatever we decide. >> sunday night on :00 eastern on c-span's "q&a." >> british prime minister precipitation may -- british prime minister theresa may spoke to parliament about her recent meeting with european leaders. she was asked about the impact